Europe still on course to meet Lisbon goals, says AOL chief

Date: 14/03/02

By Peter Chapman

STEVE Case, chairman of AOL Time Warner, the world's biggest communications company, says Europe can still achieve its target of becoming the most competitive knowledge-based economy on the planet by 2010.

And the internet tycoon believes that EU competition policy is helping to lay the foundations for Europe to realise the objective set by heads of government at the Lisbon summit two years ago.

His upbeat assessment of the EU's progress may come as some surprise, especially since AOL's own expansion plans were abruptly halted when EU anti-trust watchdogs vetoed its bid to acquire EMI Music.

Speaking to European Voice, Case says the vultures hovering above this weekend's economic summit in Barcelona should find another prey.

'I am more of an optimist about 2010. I think it [the EU] does have a chance. Eight years is a long time in internet time,' he says.

'Ten years ago when our company went public we had 200,000 customers. Now we have 33 million.

'A lot can happen in a decade if you have the right policies in place and the right priorities - and I think the basic ones [in the EU] are the right ones.'

Case argues that a key to the EU achieving its aims and catching up to the US is the consistent application of telecom rules across member states.

The biggest priority must be the continent's economic powerhouse, Germany, which has proved a constant thorn in his company's side by holding back competition for internet services.

Case's cause célèbre is flat-rate access to basic internet 'narrow band' services, allowing customers to surf the web for as long as they want for a set monthly charge.

Case says such cheap services are the 'logical entry point for the masses'. Only after tasting flat-rate will many customers trade up to faster, more expensive broadband services.

But he says Germany's Deutsche Telekom has refused to follow the lead of operators in other big member states.

'If you think about the Barcelona summit the critical question is how to expand the penetration of the internet and one limiting factor is the absence of an affordable flat-rate narrow-band service in Germany,' he says.

'I think that is unfortunate because that means Germany is unable to provide internet for all. It is more like internet for the rich.'

Brussels is investigating Germany's failure to implement EU telecom rules which demand fair competition in local markets. Case says 'a more forceful inquiry' may be needed.

But if getting the right telecoms rules in place and applied evenly is still a problem, Case stresses that European competition policy, led by Commissioner Mario Monti, is already top of the class.

It's not a view likely to be shared by other US executives in the light of the Commission's decision to block the GE/Honeywell deal last year.

However, Case argues that Brussels has now 'taken the lead' in the battle to check Microsoft's bid for world dominance in the computer operating system market.

The big risk, he adds, is that Bill Gates' dominance in PC operating system software could 'expand to other devices like TVs or stereos or telephones'.

He says many companies now believe that Brussels, and not Washington, better understands the 'strategic importance' of the Microsoft issue and the need to take 'appropriate steps' to ensure that there is competition.

Monti's apparent willingness go head-to-head with Gates takes on even greater importance now that Washington has loosened the knot around Microsoft.

Says Case, 'It's now a matter of judicial review but I am certainly disappointed by some of the steps that the Department of Justice has taken.

'I applaud their need to focus on the war on terrorism, but that doesn't strike me as an excuse to back away from making sure that these markets are competitive.'

No surprise, then, that Case was in Brussels last week to speak to his new buddy, Mario Monti.

Steve Case, chairman of AOL Time Warner, says Europe can still achieve its target of becoming the most competitive knowledge-based economy in the world by 2010.